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From Unemployment to Self-Employment: An Evaluation of Self-Employment Assistance Programs

Author

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  • Alexandre Gaillard
  • Sumudu Kankanamge

Abstract

This paper evaluates self-employment assistance (SEA) programs, which are government initiatives extending the unemployment insurance system to support unemployment to self-employment transitions. Using a general equilibrium model of the US labor market, we show that these programs have important labor market mobility effects and increase the self-employment rate. They also significantly impact the composition and performance outcomes of self-employment: while lump-sum subsidies select low-skilled individuals, SEA programs contingent on previously employed earnings select skilled and wealthier individuals. At the aggregate level, the latter programs mainly reallocate individuals from employment to self-employment, leaving the unemployment rate largely unaffected.

Suggested Citation

  • Alexandre Gaillard & Sumudu Kankanamge, 2026. "From Unemployment to Self-Employment: An Evaluation of Self-Employment Assistance Programs," Journal of Labor Economics, University of Chicago Press, vol. 44(1), pages 309-349.
    • Handle: RePEc:ucp:jlabec:doi:10.1086/732765
    DOI: 10.1086/732765
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